Correlation Between International Consolidated and Schweiter Technologies

Can any of the company-specific risk be diversified away by investing in both International Consolidated and Schweiter Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining International Consolidated and Schweiter Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Consolidated Airlines and Schweiter Technologies AG, you can compare the effects of market volatilities on International Consolidated and Schweiter Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in International Consolidated with a short position of Schweiter Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Schweiter Technologies.

Diversification Opportunities for International Consolidated and Schweiter Technologies

0.7

Correlation Coefficient

International Consolidated  Schweiter Technologies

Poor diversification

The 3 months correlation between International and Schweiter is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies and International Consolidated is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on International Consolidated Airlines are associated (or correlated) with Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of International Consolidated i.e., International Consolidated and Schweiter Technologies go up and down completely randomly.

Pair Corralation between International Consolidated and Schweiter Technologies

Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 0.96 times more return on investment than Schweiter Technologies. However, International Consolidated Airlines is 1.04 times less risky than Schweiter Technologies. It trades about 0.11 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about -0.04 per unit of risk. If you would invest  14,401  in International Consolidated Airlines on December 4, 2024 and sell it today you would earn a total of  20,119  from holding International Consolidated Airlines or generate 139.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

International Consolidated Air  vs.  Schweiter Technologies AG

International Consolidated

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Schweiter Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Schweiter Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with International Consolidated and Schweiter Technologies

The main advantage of trading using opposite International Consolidated and Schweiter Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Schweiter Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Schweiter Technologies will offset losses from the drop in Schweiter Technologies' long position.

The idea behind International Consolidated Airlines and Schweiter Technologies AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.